Market Snapshot | February 25, 2022

Corn producers: Increase old- and new-crop sales… After rallying to new contract highs and the highest prices for a front-month contract since July on Thursday, corn futures retreated. While there may be more upside if the Russia/Ukraine crisis persists, the pricing opportunity is too good to pass up. We advise corn hedgers and cash-only marketers to sell another 10% of 2021-crop to get to 90% sold. All corn producers should also sell another 10% of expected 2022-crop for harvest delivery to get to 40% forward-priced.

Soybean producers: Increase new-crop sales… November soybean futures have pulled back sharply after failing to find sustained buying on the spike above $15 on Thursday. As a result, we advise hedgers and cash-only marketers to sell another 10% of expected 2022-crop for harvest delivery to get to 40% forward-priced. You should be down to what you consider gambling stocks on 2021-crop production.

Wheat producers: Increase old- and new-crop sales… Front-month winter wheat contracts have erased nearly all of Thursday’s limit-up performance. While there may be more upside if the Russia/Ukraine crisis persists, the price action suggests some sales need to be made. We advise hedgers and cash-only marketers to sell another 10% of 2021-crop to get to 90% sold. Hedgers should also lift the 20% hedge in March SRW futures, which go into delivery on Monday. Add a 10% 2021-crop hedge in July SRW futures. All wheat producers should also sell another 10% of expected 2022-crop for harvest delivery to get to 40% forward-priced.

Corn futures are sharply lower at midmorning, led by losses of around 30 cents in old-crop contracts.

• Corn futures followed wheat lower in a broad grain market selloff after Russia’s invasion of Ukraine yesterday sent prices to multi-year highs. Prices are still up for the week.
• USDA reported net 2021-22 U.S. corn sales of 1.041 MMT for the week ended Feb. 17, up 27% from the previous week and up 4% from the average for the previous four week. Sales surpassed trade expectations ranging from 500,000 to 900,000 MT.
• Exports of 1.886 MMT, a marketing-year high, were up 17% from the previous week and up 41% from the four-week average.
• Taiwan passed on a tender to buy up to 65,000 MT of corn due to offered prices being too high.
• May corn fell as low as $6.57 1/4 after reaching $7.16 1/4 yesterday. The contract is up from $6.52 3/4 at the end of last week.

Soy complex futures are sharply lower, with nearby soybeans down more than 50 cents, nearby soymeal down over $12 and nearby soyoil down more than 200 points.

• Soybeans dropped amid profit-taking following yesterday’s surge to 9 1/2-year highs. The Russia/Ukraine war may disrupt wheat shipments from the Black Sea region, but is seen having limited impact on soybeans, other than soyoil and other vegetable oil markets.
• Net weekly 2021-22 soybean sales totaled 1.233 MMT for 2021-22, down 6% from the previous week and down 1% from the prior four-week average. Sales for 2022-23 totaled 866,500 MT, including 601,000 MT to China and 192,000 MT to unknown destinations.
• Exports of 1.26 MMT were up 8% from the previous week but down 5% from the prior four-week average. Sales topped trade expectations ranging from 500,000 MT to 1.2 MMT.
• USDA also reported daily soybean sales of 334,000 MT to China for 2022-23 and 285,000 MT to unknown destinations – 159,000 MT for 2021-22 and 126,000 MT for 2022-23.
• Today’s sales were the latest in a four-week string of purchases. Since Jan. 28, USDA has reported a combined 4.399 MMT of soybean sales to China or unknown destinations. By comparison, over the month prior to Jan. 28, sales to China and unknown destinations totaled just 648,000 MT.
• May soybeans fell as low as $15.94 1/4 after reaching a contract high at $17.59 1/4 yesterday. The most-active contract ended last week at $16.03 1/2.

Wheat futures are sharply lower, with nearby HRW and SRW contracts dropping more than 60 cents.

• Wheat markets fell under heavy profit-taking as traders weighed impacts of Russia’s invasion of Ukraine. Together, the countries account for nearly 30% of global wheat exports.
• Net weekly U.S. wheat sales totaled 516,900 MT for 2021-22, more than four times the previous week’s sales and more than double the average of 234,242 MT for the previous four weeks. Net sales for 2022-23 totaled 169,200 MT. Sales were expected to range from 100,000 to 450,000 MT for 2021-22 and zero to 100,000 MT for 2022-23.
• May SRW wheat reached a contract high overnight at $9.60 3/4 before tumbling, while March SRW hit $9.51 1/4, the highest for a nearby contract since 2008, when prices reached $13.34 1/2. May SRW wheat is still up from $8.04 at the end of last week.
• May HRW futures posted a contract high at $9.81 and March reached $9.71 3/4, the highest for a nearby contract since April 2011. Based on continuation charts, upside targets include the 2011 high at $9.90 1/2 and the 2008 high at $13.84 3/4.

Feeder cattle futures are sharply higher at midmorning, while live cattle have turned mixed.

• Feeder cattle are being boosted by a sharp drop in corn prices.
• Live cattle worked higher initially on corrective buying but buyer interest is limited.
• Yesterday’s futures declines prompted packers to pull back cash cattle bids, though cash prices are still on track to strengthen for the fourth consecutive week.
• USDA-reported live steers averaged $143.94 this week through yesterday morning, $1.58 above last week's average, but volume has been light ahead of USDA’s Cattle on Feed Report.
• Choice grade beef cutout values fell $1.64 yesterday to $259.24, the lowest daily average since early April. Movement was strong at 170 loads.
• Traders expect USDA’s Cattle on Feed Report this afternoon to show Feb. 1 feedlot supplies up 0.8% from year-ago at roughly 12.2 million head. After bigger-than-year-ago placements the three previous months, the figure for January is expected to be down 0.8% from year-ago. But traders expect last month’s marketings to have fallen 2.7% from last year.
• Net weekly U.S. beef sales totaled 14,500 MT for 2022, down 37% from the previous week and down 25% from the prior four-week average.
• April live cattle rose as high as $144.175 today but are still heading for a lower weekly close after ending last week at $145.875. Initial support is seen at yesterday’s low of $142.100 and the 100-day moving average at $141.725.

Lean hog futures are broadly lower and setting fresh lows for the week.

• April lean hogs fell for the third consecutive session as the market extended sharp losses stemming in part from a bearish key reversal at midweek, signaling a potential near-term peak.
• Cash fundamentals remain strong but are showing signs of topping. The CME lean hog index fell 12 cents to $98.04, the first decline since Jan. 19.
• Pork carcass cutout values jumped $5.01 yesterday to $114.13, led by a gain of over $13 in primal hams. Movement totaled about 266 loads.
• Net weekly U.S. pork sales totaled 26,600 MT for 2022, up 45% from the previous week, but down 8% from the prior 4-week average. 
• China’s sow herd fell 0.9% during January to 42.9 million head, though that was still up 2% from last year, according to the country’s ag ministry. The country’s hog slaughter totaled 28.5 million head during January, down 1.7% from December, but up 45.9% from last year.
• April lean hogs fell as low as $103.55, the lowest intraday price since $102.075 on Feb. 15, and are down from $109.40 at the end of last week.